Shots - Health News

3:09 am

Tue April 30, 2013

Why Calif. Doesn't Want Smokers To Pay More For Health Insurance

Californian State Assemblyman Richard Pan (center) is the author of legislation that would bar higher prices for health insurance sold to smokers.

Rich PedroncelliAP

Smoking has its risks, but in California higher prices for health insurance probably won't be among them.

The federal health law allows states to charge smokers up to 50 percent more for a health plan, but a bill moving forward in the California Legislature would prevent that from happening.

The Affordable Care Act is supposed to remove discrimination in the pricing of health insurance for things like gender and medical condition. Critics say a tobacco surcharge creates a new category of discrimination against smokers.

Furthermore, a surcharge for smokers would mean they wouldn't get the benefit of the subsidy that's supposed to make buying insurance through the marketplaces in 2014 more affordable, says Karen Pollitz of the Kaiser Family Foundation.

For a low-income person, a $3,000 subsidy makes affordable a policy otherwise costing $6,000. A tobacco surcharge would push it back up to $6,000, she says.

If the state opted for the maximum surcharge, health insurance would become unaffordable for those with the lowest incomes, according to Rick Curtis, president of the Institute for Health Policy Solutions in Washington. And, he points out, it's that group that's most likely to smoke.

"For somebody who is totally hooked after many years and older ... and those kinds of people are more expensive and often do need more medical care, they have two bad choices: go without health insurance and be impoverished that way, or get health insurance and be impoverished."

The Centers for Disease Control and Prevention says tobacco use costs the nation about $190 billion in medical care and lost productivity each year.

And that's exactly why Micah Weinberg, a health policy analyst with the Bay Area Council in the San Francisco region, thinks higher rates for smokers make sense.

"If we're ultimately interested in bringing down the price of health care for everybody, including low-income folks, then we need to make sure we get a handle on unhealthy behaviors such as smoking," he says.

Weinberg says higher insurance premiums for tobacco users — as long as they're not too high — provide the type of financial penalties that studies say cause people to quit smoking. By contrast, he says, banning higher rates because smoking disproportionately affects the poor reflects paternalistic policymaking that does nothing to fix the problem.

"I think we have to be very careful what types of favors we're doing for people. Because if the end result of this policy is greater numbers of smokers, then that's not actually helping the populations that we're trying to help," he says.

But California Democratic Assemblyman Richard Pan disagrees. He's a Sacramento pediatrician who wrote the legislation. Pan believes rate increases of any amount on smokers' premiums may dissuade some from buying health insurance altogether.

"We want smokers to actually have health care coverage," he says. "And through having health care coverage they will have access to smoking cessation treatment as well as, of course, health care for not only smoking-related but even their nonsmoking-related illness."

And for many in California, at least, that seems to make sense. Pan's proposed law has so far encountered no formal opposition from anti-smoking groups, cigarette companies, insurance companies or the American Lung Association.

It's essential to provide tobacco users with affordable health insurance — rather than to make them pay more for it — because it's so hard to quit smoking, officials at the ALA's California branch said in a written statement.

If the measure passes, California would join Massachusetts, Vermont, Rhode Island and the District of Columbia in making sure smokers aren't charged more under the federal law.

Governor Jerry Brown of California is ready to sign a bill making sure smokers get some insurance protections under the new federal health law. Under that law, states can choose to allow insurers to charge tobacco users up to 50 percent more for premiums. But as Stephanie O'Neill of member station KPCC tells us, California smokers may get a break.

STEPHANIE O'NEILL, BYLINE: Among the basic goals of the federal health law is to remove discrimination in the pricing of health insurance based on things like gender and medical condition, and to make health plans more affordable, especially for low income Americans.

But critics say, by allowing a tobacco surcharge of up to 50 percent, the law creates a new category of discrimination that singles out smokers.

Karen Pollitz is a health policy analyst with the Kaiser Family Foundation. She says a surcharge could negate the benefits of subsidies offered under the Affordable Care Act.

KAREN POLLITZ: So if you're a low-income person and you would otherwise be buying a $6,000 policy, but maybe qualify for a subsidy, you know, that would buy it down to $3,000, well, the tobacco surcharge would knock it back up to 6,000 again.

O'NEILL: California's proposal would ban this type of discrimination. Rick Curtis is president of the Institute for Health Policy Solutions in Washington D.C. He studied the issue in California and found if the state opted for the maximum surcharge, health insurance would become unaffordable for those with the lowest incomes. And, he points out, it's that group that's most likely to smoke.

RICK CURTIS: And for somebody who's totally hooked after many years and older - and those kinds of people are more expensive and often do need more medical care - they have two bad choices: go without health insurance and be impoverished that way, or get health insurance and be impoverished.

O'NEILL: The Centers for Disease Control and Prevention says tobacco use costs the nation about $190 billion in medical care and lost productivity each year. And that's exactly why health policy analyst, Micah Weinberg, thinks higher rates for smokers make sense.

MICAH WEINBERG: If we're ultimately interested in bringing down the price of health care for everybody, including lower-income folks, then we need to make sure that we get a handle on unhealthy behaviors such as smoking.

O'NEILL: Weinberg, who works with the Bay Area Council in the San Francisco region, says higher insurance premiums for tobacco users - as long as they're not too high - provide the type of financial penalties that studies say cause people to quit smoking. By contrast, he says, banning higher rates because smoking disproportionately affects the poor, reflects paternalistic policy-making that does nothing to fix the problem.

WEINBERG: We need to be very careful that we don't raise rates for smokers so high that it makes insurance entirely unaffordable for them. But we still need to provide a strong financial disincentive for people to smoke.

O'NEILL: But California Democratic Assemblyman Richard Pan, of Sacramento, disagrees. He's a pediatrician who wrote legislation that would make the state among the first to adopt such a ban under the federal law. Pan believes rate hikes of any amount on smoker's premiums may dissuade some from buying health insurance all together.

ASSEMBLYMAN RICHARD PAN: We want smokers to actually have health care coverage. And through having health care coverage they will have access to smoking cessation treatment, as well as, of course, health care for not only smoking related but even their non-smoking related illness.

O'NEILL: And for many - in California, at least - that seems to make sense. Pan's proposed law has so far encountered no formal opposition - be it from anti-smoking groups, cigarette companies, insurance companies or the American Lung Association. Officials at that group's California branch said in a written statement that because it's so hard to quit smoking, it's essential to provide tobacco users with affordable health insurance, rather than to make them pay more for it.

But there may be another reason for the lack of formal opposition.

WEINBERG: People have far bigger fish to fry.

O'NEILL: Again, Micah Weinberg of the Bay Area Council.

WEINBERG: For those people who do care a tremendous amount about making sure that health care reform includes individual responsibility, as well as collective action, a lot of those folks just disagree with the Affordable Care Act and its implementation generally, so they don't feel like engaging with it on this level of specificity.

O'NEILL: So, he says, they're likely to remain silent as California considers whether to ban higher health insurance premiums for tobacco users. If the measure passes, California would join Massachusetts, Vermont, Rhode Island, and the District of Columbia in making sure smokers aren't charged more under the federal law.

For NPR News, I'm Stephanie O'Neill in Los Angeles.

INSKEEP: Our report is part of a partnership with NPR, KPCC and Kaiser Health News.